Anomalous Weather, Prices and the ‘Missing Middle’

Dan Bebber, Han Lin, Tim Lloyd, Steve McCorriston and Varun Varma

No 321228, 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium from Agricultural Economics Society - AES

Abstract: Climate change will increase the frequency of extreme weather events, affecting food systems. How food prices in domestic markets are affected by resulting supply shocks is key to understanding the impacts of climate change on food security. The expectation that supply shocks are fully translated into higher consumer prices may, however, not hold true even for commodities that see minimal processing from farm to plate and, in particular, where vertical chains deviate from perfect competition. Focussing on four major consuming countries, we show that anomalous weather patterns in exporting countries affects the spread between world and retail prices suggesting that shocks are mainly ameliorated (but in one case, exacerbated) by firms that comprise the supply chain - ‘the missing middle’. Our findings highlight placing equal emphasis on understanding how firms in this ‘missing middle’ will adapt to, and determine the impact of, climate shocks on participants in value chains.

Keywords: Environmental Economics and Policy; International Relations/Trade; Demand and Price Analysis (search for similar items in EconPapers)
Pages: 20
Date: 2022-04
New Economics Papers: this item is included in nep-agr and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc22:321228

DOI: 10.22004/ag.econ.321228

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